It depends on how fancy you want to get.
For a simple or country look, use felt. Cut two pieces the shape you want and sew about 1/2" from the edge. Don't turn them. Sew or glue felt shapes to get the picture on the front.
For a more complicated country look, quilt it. You can use patchwork or applique. Look for a Christmas sewing magazine. Those usually have stocking patterns.
For a traditional simple look, use fake fur in red and white. Leave it very simple, with no other decor.
For an elegant simple look, use a cotton velvet, but be sure to flatline it with another fabric for some stiffness.
For a fancy traditional look, use upholstery fabric in golds and silvers. Upholstery cording and tassles make good decor on these.
Grab the guns. I'll make pancakes. ~Sarah Conner